New suitor adds drama to bank sale

By Lisa Eckelbecker TELEGRAM & GAZETTE STAFF

Saturday

May 30, 2009 at 12:22 AM

CNB Financial Corp., the parent of Commonwealth National Bank, changed course yesterday and said it now plans to talk with United Financial Bancorp Inc. and one other unidentified bank about their unsolicited offers to buy CNB.

The move came three days after United Financial of West Springfield, the parent of United Bank, upped its offer to acquire CNB to $10.25 per share in cash and stock, or about $23.4 million.

The identity of the new bidder remained unclear yesterday. Charles R. Valade, president and chief executive of CNB, declined to comment, saying the name of the new party was confidential.

CNB reported that meantime, its $21 million merger agreement with Pittsfield-based Berkshire Hills, the parent of Berkshire Bank, remained in effect.

Worcester makes an appealing target for banking acquisitions because the city possesses a reasonably dynamic business market and sits surrounded by reasonably affluent suburbs, said John S. Carusone, president of the Bank Analysis Center in Hartford.

“For those reasons, it represents an attractive market extension, particularly if you’re in the western end of the state and your desire is creating a larger footprint across the commonwealth,” Mr. Carusone said. “Or, if you’re in Worcester, you’re interested in keeping people out.”

Commonwealth National Bank operates six branches and possesses about $297 million in assets. CNB stock rose 40 cents to $9.40 yesterday on the Over the Counter Bulletin Board, an electronic exchange.

CNB cautioned in a news release that it could not strike a deal with United Financial or another bank unless it first terminates the agreement with Berkshire Hills. CNB could end the agreement if its directors do not recommend the merger. CNB and Berkshire Hills could also mutually agree to end the deal, or either party could end it if CNB shareholders reject the agreement, CNB reported.

Berkshire Hills has reported in a separate filing with the Securities and Exchange Commission that if the merger falls through, CNB might have to pay a termination fee of $970,000.

The bidding war for CNB started in April when Berkshire Hills reported it would acquire CNB for stock valued at about $19.5 million. United Financial countered with a stock-and-cash offer that valued CNB at $10 per share, or about $22.8 million. Berkshire Hills and CNB reaffirmed their merger plans, although for more stock valued at about $21 million. That led to United Financial’s offer of $10.25 per share in cash and stock, or about $23.4 million.

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